Single Family with Renter

13 Replies

I am looking at buying a single family with a renter already in it. I have requested the payment records and lease agreement. What else should I be looking for?

Besides the usual due diligence on the property side you need an estoppel letter from the tenant stating their understandings of the lease being the same as the lease agreement to ensure there have not been any modifications or promises expressed to the tenant. You need to make sure the tenant isn't under any impression of being entitled to any other rights or obligations, that payments are to be as agreed and the landlord didn't make any side agreements with them. It verifies the lease terms.

Need to look at the tenant application file to see who you are getting. Do they qualify, re-qualify them basically, verify employment for existing tenants assumed.

Verify utility history with utility providers to ensure the tenant has been there for the term indicated, there are scams by turn-key sellers, this verifies the tenant has really been there.

Review their payment record and any collection efforts.

The landlord needs to send the tenant a notice of sale, certified mail, return receipt requested. This may be required by law, if not it's a good practice as a tenant can send a payment off and you'll need to collect from a seller trotting off and a tenant refusing to pay twice.

Tenant wise, that's about all I'd do. Good luck :)

I always have the tenant sign a new lease with me when I buy a property. Also I meet the tenant before I buy the property and talk with them, and also have a sit down meeting with them after I buy not only to sign the lease but go over any repairs that are needed. Especially when a property is bank owned, the banks seem to do minimal work.

On the last one I bought, the tenant wasn't able to use the garage to park their car because the garage door didn't work. Everything was all bent out of alignment. It wasn't that expensive to fix, but the tenant loved having it fixed after I took over because of course it was winter and who wouldn't want to park in the garage? But to the bank, it wasn't a "required" fix -- the tenant could park outside.

Thanks Dawn. Is it an option to just continue on with the old lease or do you need to create a new agreement with a change of ownership?

Legally speaking if there is a lease in place it continues and you are bound to it, so there is no option necessarily, you must continue with it. Now if you can get the tenant to agree to terminating that lease and signing a new one that is an option and IMO it's good practice.

Reason being you are now bound to the terms and clauses in that existing lease, which may seem alright until an issue comes up that either isn't covered or is covered differently than you would have liked. So if possible get them on your lease, if you can't that's the purpose of the e stoppel it makes sure they, and more importantly you, understand the lease terms you're agreeing to.

Using your lease it makes your job easier as now going forward all your properties have the same terms enabling you to always understand what exactly is covered and how.

Originally posted by @Matt Devincenzo :
Legally speaking if there is a lease in place it continues and you are bound to it, so there is no option necessarily, you must continue with it. Now if you can get the tenant to agree to terminating that lease and signing a new one that is an option and IMO it's good practice.

Reason being you are now bound to the terms and clauses in that existing lease, which may seem alright until an issue comes up that either isn't covered or is covered differently than you would have liked. So if possible get them on your lease, if you can't that's the purpose of the e stoppel it makes sure they, and more importantly you, understand the lease terms you're agreeing to.

Using your lease it makes your job easier as now going forward all your properties have the same terms enabling you to always understand what exactly is covered and how.

That's exactly why I prefer everyone to be on my lease instead. I've never had any issues having a tenant sign over. (But have only inherited 4 sets of tenants.)

I am getting close to closing on this house. What is the consensus on paying for a survey?

@Daniel Foster I think its also important that the tenant is made aware of the way you will be managing the property. When owners change some of the friendly agreements and concessions between parties inevitably change. So, its important to make the tenant aware that regardless of the way the previous owners ran things, they will be expected to conduct themselves in the highest level of conduct within the terms of the lease. Basically let em know that you are a business man, and you're serious about your property.

Thanks Kevin. What do you think about the survey question?

Originally posted by @Daniel Foster :

I am looking at buying a single family with a renter already in it. I have requested the payment records and lease agreement. What else should I be looking for?

 Hey Daniel,

How did things work out for you with buying the single family home with a renter? I am now looking to purchase sfh w/ tenant too. Do you have any advice from your experience?

@Rhondalette W.

Its actually gone very well.  The tenant signed a 1 year lease in the summer of 14 and a two year lease in the summer of 15.  The interior of the house needs some updating to get a new renter, so keeping the current tenant is ideal.  They have also never been late on a payment, which is great!

Hi Daniel, 

I am in the same boat as you are when asking about a survey. Now that it's been a year, did you get a survey done on the house? And if so, do you think it was worth it?

Thanks,

Mario

I did end up getting a survey.  I have not had any issues with the questioning of property lines, so it really hasn't mattered either way thus far.  We have acquired several properties since and we get a survey each time.  Peace of mind I suppose.

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